Wilshire Launches Liquid Alternative Indices

New Indices Designed to Measure Rapidly Expanding Investment Opportunity

August 06, 2014 10:06 AM Eastern Daylight Time

SANTA MONICA, Calif.--(EON: Enhanced Online News)--Wilshire Associates Incorporated (Wilshire®) announced today
the launch of two indices designed to provide insight into an investment
category that is by nature very difficult to benchmark.

“We have seen firsthand the surge in demand for diversifying liquid
alternative strategies among the clients we advise and believe that the
Wilshire Liquid Alternative Index is a powerful tool to help investors
understand how these difficult-to-track mutual fund strategies are
actually performing”

The Wilshire Liquid Alternative Index℠ aims to deliver a precise, broad
market measure for the performance of diversified liquid alternative
investment strategies that are implemented in mutual fund structures.
The Wilshire Focused Liquid Alternative Index℠ is an optimized subset of
the broad market index that embeds intelligent screening criteria and is
designed to help firms build investable products, such as ETFs.
Constituent fund inclusion for the Focused Liquid Alternative Index is
based on Wilshire Funds Management proprietary research methodology,
which can be further customized to meet a variety of unique
specifications.

The new indices leverage the intellectual capital of two distinct
Wilshire business units: Wilshire Funds Management and Wilshire
Analytics. Wilshire Funds Management, the investment management arm of
the firm that works with financial intermediaries globally, advises on
over $130 billion in assets, including traditional and alternative
investment strategies. Wilshire Analytics is the technology foundation
of Wilshire and creator of the Wilshire 5000®, the most
comprehensive measure of the U.S. stock market.

Previously only accessible through private investments in hedge funds,
alternative investment strategies implemented through more liquid
structures have proliferated in the aftermath of the global financial
crisis as investors have sought enhanced diversification and downside
protection with a heightened emphasis on liquidity and transparency.
Wilshire estimates that the number of liquid alternatives strategies
available in the marketplace has increased nearly 500%, from
approximately 75 investable options at the end of 2008 to 450 mutual
fund products as of June 2014. Evaluating the performance of these
liquid alternative funds, however, has proven challenging.

“Alternative investments are inherently designed to behave differently
than traditional asset classes, so comparing them to well-established,
long-only indices is counterintuitive,” said Jason Schwarz, president of
Wilshire Funds Management. “Hedge fund indices are not a suitable proxy
either, as their constituents may access more illiquid investments or
deploy greater levels of leverage than is permissible under the
regulations of the Investment Company Act of 1940.

“We have seen firsthand the surge in demand for diversifying liquid
alternative strategies among the clients we advise and believe that the
Wilshire Liquid Alternative Index is a powerful tool to help investors
understand how these difficult-to-track mutual fund strategies are
actually performing,” Schwarz added.

The index draws upon the Wilshire Manager Research group’s in-depth
analysis and categorization of all available liquid alternative mutual
funds in the marketplace. Each liquid alternative mutual fund is
classified into one of the following broad categories: equity hedge,
event driven, global macro, relative value, or multi-strategy. The
Wilshire Liquid Alternative Index methodology combines these strategy
groups to ensure both style diversification and market representation.

Constituent mutual funds for the Wilshire Focused Liquid Alternative
Index are screened based on additional criteria, including longevity of
track record, correlation to equities and fixed income, and assets under
management. Returns for the Wilshire Liquid Alternative Index are
available on a daily basis from December 31, 2013 and on a monthly basis
from December 31, 1999.

“Developing an appropriate index for a quickly evolving market demands
finding the right partner to lend market expertise, as well as
distribution capabilities,” said Cecilia Loo, president of Wilshire
Analytics. “We are fortunate to have this expertise under the same roof,
within Wilshire Funds Management. As an early innovator in the
application of investment analytics and research, Wilshire is uniquely
positioned to respond nimbly to what we perceive to be a clear gap in
the marketplace,” added Loo.

The firm was founded in 1972, providing revolutionary technology and
acting as an early innovator in the application of investment analytics
and research to investment managers in the institutional marketplace.
Wilshire also is credited with helping to develop the field of
quantitative investment analysis that uses mathematical tools to analyze
market risks. All other business units evolved from Wilshire’s strong
analytics foundation. Wilshire developed the Wilshire 5000 Total Market
Indexand became an early innovator in creating integrated
asset/liability analysis/simulation models as well as practical models
in risk budgeting through beta and active risk analysis. Wilshire has
grown to a firm of more than 300 employees serving the needs of
investors around the world.

Based in Santa Monica, California, Wilshire provides services to clients
in more than 20 countries representing more than 500 organizations with
assets totaling approximately US $7 trillion.* With ten offices on four
continents, Wilshire Associates and its affiliates are dedicated to
providing clients with the highest quality counsel, products and
services. Wilshire® and Wilshire 5000® are
registered service marks of Wilshire Associates Incorporated. Wilshire
5000 Total Market Index℠, Wilshire US Micro-Cap Index℠,
Wilshire US Large-Cap Value Index℠, Wilshire US Large-Cap
Growth Index℠, Wilshire US Small-Cap Growth Index℠
and Wilshire US Small-Cap Value Index℠, Wilshire US Real
Estate Securities Index℠ and Wilshire exUS Real Estate
Securities Index℠ are service marks of Wilshire Associates
Incorporated.

*Client assets are as represented by Pensions and Investments (detailed
in “P&I’s Top 1,000 Largest Retirement Plans” and “P&I’s Largest Money
Managers Directory 2013” as of 9/30/12 and 12/31/12, and published
2/4/13 and 5/27/13, respectively).